France: French GDP growth back to reality in Q4 after the Olympics

French GDP growth decreased by -0.1 % (-0.08 % , see chart 1 ) quarter-on-quarter in the 4th quarter according to the Insee flash estimate, in line with our expectations and below the Bloomberg consensus (0.0%), after +0.4 % in Q3. We noticed slight revisions for past quarters with downward revisions for Q1 2024 to +0.1% (-0.1 pp) and upward revisions for Q2 to +0.3% (+0.1 pp) . As expected, GDP growth was dampened by some backlash effects following the “Olympic Games” (by around -0.2 pp) , as sales of tickets and audiovisual broadcasting rights had boosted growth in the third quarter . Such backlash effect s w ere already observed after the London Olympic Games in 2012, with slight negative growth in Q4 2012. French underlying growth thus remains slightly positive, around +0.1%, but showing some signs of slowing. In the 4 th quarter, d omestic demand (excl. inventories) made a positive contribution to GDP ( +0.3 pp) . Household consumption slowed a little in Q4 (+0.4% after +0.6%) due to backlash effects from the Olympics but bounced back in transport services and in accommodation and food services. Investment was broadly stable despite a sharp drop in construction investment (-1.2% Q/Q). Foreign trade made a negative contribution (-0.2 pp) as changes in inventories (-0.1 pp). GDP growth amounts 1.1% (1,07%) in 2024 , as we expected and unchanged from 2023 (chart 2) . H ousehold consumption increased at the same rate as in 2023 (+0.9%) with a slowdown in services consumption and a stabilization of consumption of goods after a sharp decline in 2023. General government’s consumption expenditure rose to 2.1% from 0.8% in 2023. Investment decreased sharply in 2024 (-1.5% after +0.7%) with major drop in investment in construction (-2.5% after -0.9%), and investment in manufactured goods (-4.5% after +3.8%). Investment in information and communication remained strong (+5.0% after +8.4%). Foreign trade contributed positively to GDP growth (+0.9 pp after +0.6 pp) even if this reflects a fall in imports (-1.1% after +0.7%) and a slowdown in exports (+1.6% after +2.5%) . Changes in inventories made a negative contribution. We will revise our 202 5 GDP forecast (0.9%) in the next monthly financial forecast next week, likely slightly to the downside. P rolonged political and fiscal uncertainties will hurt growth, especially private investment . Employment is also at risk, with sharp increase in fears of unemployment in both business and households’ surveys. However, recent surveys (Insee, PMIs) continue to point to a positive start of the year, and we think so me upward surprises cannot be excluded in 2025 (agriculture, spacecrafts and aircrafts, tourism, etc.) despite global risks tilted to the downside (political uncertainty , tariffs, fiscal consolidation, etc.).